Paid parental leave policy is at the heart of the Albanese Government’s gender equality agenda. But the design of a parental leave scheme is a balancing act between promoting the societal benefits of changing gender norms and allowing parents to freely choose how they divide their time between work and care.
This tension is clearest when it comes to non-transferable leave days. These ‘use-it-or-lose-it’ days are reserved for the secondary caregiver (usually the father) and can’t be transferred to the mother. If the father doesn’t use them, the family loses them. The logic is that reserving these days encourages more fathers to take leave and shifts how care work is shared between parents.
Australia’s recent parental leave reforms are a case in point. At the start of this month, the Albanese Government expanded Paid Parental Leave (PPL) to 6 months, and the number of use-it-or-lose-it days for secondary caregivers was increased from 15 to 20.
However, research from Scandinavia suggests that simply adding more reserved days may not be enough on its own to increase the low take-up of parental leave among fathers.
Most fathers are not using their existing use-it-or-lose-it days
Using data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey, we find that many fathers were not taking the 15 use-it-or-lose-it days that were already available to them before the recent policy change. Of eligible fathers, 83 per cent were leaving some use-it-or-lose-it days on the table, 42 per cent were taking no government parental leave at all, and 41 per cent were taking less than the 3 weeks available to them.
This pattern is consistent with earlier evidence on government PPL take-up, which shows that fathers are less likely to take any leave at all, and even when they do, they take far less of it.
Why do fathers take so little leave?
One argument is that households are simply allocating leave to the lower-earning parent. Given both parents receive the same flat payment for government-provided leave (the minimum wage), households tend to give up more income when the father, who in most cases is still the higher-earner, takes it.
Is this difference in earnings responsible for men taking so little leave?
Probably not. Looking at the relationship between relative earnings and leave-taking in HILDA, the correlation is weak. Even among parents where fathers earn much less than mothers, we see little evidence of fathers taking more leave.
This likely points to the influence of several other factors, such as household preferences and social norms around caregiving, which we are unable to disentangle. But it does suggest that, under the current system where all leave is paid at a low flat rate, this leads to parents splitting leave largely along traditional gender lines.
How do we get men to take more parental leave?
Research from Europe helps shed light on how parental leave policies can encourage fathers to take more leave. A general observation is that fathers tend to take more of their use-it-or-lose-it days when leave is paid at a higher rate relative to their incomes, as in Norway and Sweden, and use less in places where leave is paid at a lower rate, such as in Germany.
Research from Denmark takes things a step further and looks at how the number of earmarked days and the payment rate interact. Using data tracking leave-taking by the population of new parents, the study estimates that raising the payment rate and increasing the share of non-transferable days both result in higher leave-taking among fathers.
But these changes don’t occur in isolation. Importantly, the paper finds a very large interaction between the payment rate and the share of non-transferable days. Increasing both the share of use-it-or-lose-it days and the payment rate has more than double the effect on fathers’ uptake than the sum of what both levers achieve on their own.
These results come from Northern European countries, where institutional and cultural differences mean the size of the effects may not translate directly. But the key lesson – that combining use-it-or-lose-it days with a higher payment rate relative to incomes does far more than either lever alone – is a useful guide for Australia’s current direction of reform.
The recent changes increase the share of non-transferable days but leave the payment rate unchanged at the minimum wage, where it has been since 2011. If the policy goal is to encourage men to take more leave, and many are already not taking their use-it-or-lose-it days, then the evidence suggests that this lever alone is unlikely to shift behaviour.
The role of employer provided leave
One important aspect of parental leave policy in Australia is the prevalence of employer-provided leave. Data from the Workplace Gender Equality Agency shows that 67 per cent of employers with 100 or more workers offer paid parental leave.
How government parental leave interacts with these employer-provided leave entitlements is an open question. From the perspective of getting more men to take leave, one interesting development is that since 2023, it has been possible for secondary carers to take government leave at the same time as their employer-provided leave.
While this may seem counter-productive to the aim of getting fathers to take more leave, if the barrier is the rate of pay, then combining leave policies may be a meaningful step towards addressing this issue.
The underlying tension facing policymakers
When deciding how many days to reserve as use-it-or-lose-it, policymakers face a trade-off between the benefits of a more equal split of leave-taking and care giving, against the cost of restricting households’ freedom to allocate leave as they choose.
As the same Danish evidence suggests, opponents of expanding non-transferable leave point out that unconstrained leave-taking reflects genuine household preferences, and that overriding it carries a real cost to households.
Recent survey evidence about household attitudes supports this. At baseline, more Danish parents opposed earmarked parental leave than supported it. Expanding it sharply reduced parents’ satisfaction with their leave allocation, with most attributing their dissatisfaction to wanting more leave for mothers, not less for fathers.
On the other hand, proponents point to the benefits of greater male involvement in care and family life. If households’ current allocation partly reflects traditional gender norms or unequal bargaining power within couples, then incentivising fathers to take more leave could help address that.
Quantifying these benefits is an active area of research. The same recent survey evidence found that after the reform, parents rated earmarked leave as more acceptable at work, more acceptable in society, and more important for the father-child bond.
Greater father involvement may also shape how social norms are transmitted to the next generation. Recent evidence from Spain finds that children exposed to a paternity leave reform held more gender-equal views about work and care in early adolescence.
In deciding how many use-it-or-lose-it days to allocate, policy makers must ultimately weigh these costs and benefits against each other. This is a judgment that depends on how much value is placed on the losses from restricting households’ freedom to divide their leave as they choose, against the gains from shifting gender norms.
This trade-off interacts with the question of leave payment rates. Countries that pay leave at a higher rate often do so by linking it to the parent’s pre-birth earnings, rather than a flat amount. A shift in this direction would benefit many higher-earners and raise its own equity concerns. It would also result in fathers being paid more than mothers for parental leave on average.
So far, Australian policymakers have been unwilling to raise payment rates, which would either come at significant fiscal cost or mean cutting the length of overall leave entitlements. Such a cut would mostly affect mothers, and evidence finds this was met with considerable resistance when Denmark went down a similar path in 2022.
Australia has so far taken a different path, raising earmarked days while leaving the payment rate untouched. But whatever the policy motivation, the evidence makes clear that this reform is unlikely to change fathers’ leave-taking by much on its own.
This paper uses unit record data from Household, Income and Labour Dynamics in Australia Survey [HILDA] conducted by the Australian Government Department of Social Services (DSS). The findings and views reported in this paper, however, are those of the author[s] and should not be attributed to the Australian Government, DSS, or any of DSS’ contractors or partners. DOI: 10.26193/GMYVPW.
Josh Clyne is a Pre-doctorate Economist at the e61 Institute. His research primarily explores the design of the tax and transfer system. Prior to joining e61, Josh completed a Masters in Economics from the University of Copenhagen and he completed his Bachelor Studies at the University of Melbourne.
Rachel is a Research Economist at the e61 Institute. She holds a Bachelor of Philosophy with First Class Honours in Economics from the University of Western Australia. Prior to e61, Rachel completed the graduate program at Deloitte Access Economics where she worked on projects in the digital economy, education, tourism, and other sectors.
Rachel is currently conducting research in structural policy reform, including states’ payroll taxes and its effects on firm growth, and entrepreneurship and innovation in Australia.